RED BOOK VALUATIONS Local authority accounting - asset valuations and the Red Book
- Donna Best
- Aug 5
- 6 min read
Updated: Sep 15
 | Donna has some 30 years of experience in the property industry, both in private practice and local government. Her experience is currently being utilised within the profession support and assurance (valuation) team at RICS where her role is to support, coach and regulate Registered Valuers into compliance with RICS professional rules and standards. |
In a second article from Donna, here she prepares frequently asked questions and answers, and also alerts valuers to a free webinar workshop about Red Book compliance. |
The Profession Support & Assurance team within RICS Regulation runs a Red Book compliance workshop. It’s free to attend and provides 3½ hours formal CPD.
This live workshop webinar is a great opportunity to engage with the RICS and ask questions or make comment in respect of any current Red Book queries and/or issues relating to RICS Rules of Conduct and best practice. Over the last few months, we have collated questions received in relation to local authority asset valuations and are now pleased to share these with the ACES membership.
Who can undertake local authority asset valuations?
The CIPFA Code of practice on local authority accounting (The CIPFA Code) requires that the valuations are undertaken by a qualified valuer. The definition of a qualified valuer is “a person conducting the valuations who holds a recognised and relevant professional qualification and having sufficient current local and national knowledge of the particular market, and the skills and understanding to undertake the valuation competently”.
If you are a member of RICS, you must be a Registered Valuer to meet the ‘qualified valuer’ criteria.
If I am an in-house valuer and member of RICS, do I need to be a Registered Valuer?
If you are a Chartered or Associate Member of RICS and carrying out valuation work other than that included in the exceptions listed the Red Book PS 1, section 5, then yes, you need to be a Registered Valuer in compliance with the RICS Valuer Registration Scheme [Ed – see Donna’s previous article].
I am an in-house valuer and commission asset valuations. Do I need to be a Registered Valuer to present the report to the Finance Department?
In this circumstance, you are acting as the client and commissioning the work from an external valuer who has signed off the valuations and is the ‘responsible valuer’. Where this is the case, then no, you would not need to be a registered valuer.
Does a local authority asset valuation prepared for financial statements need to comply with mandatory Red Book requirements?
Yes. Compliance with PS 1, PS 2 and VPSs 1-6 within the global standards is mandatory for any member of RICS or RICS-regulated firm involved in undertaking or supervising valuation services by the provision of written valuation advice.
This is because the valuations are provided for inclusion in a published document in which the public has an interest and/or upon which third parties may rely. In addition, The CIPFA Code requires that valuations are carried out in accordance with current RICS Valuation – Global Standards: UK national supplement (Red Book).
A key benefit of the Red Book, as well as providing a framework for valuation activity, is that it is also a risk management tool for surveyors. Compliance will ensure that an all-important audit trail is put in place. This in turn will assist the defence of any challenge to the valuation work undertaken.
What about other valuation activity (not asset valuations) that are undertaken as an in-house valuer for a local authority?
Professional Standards 1 and 2 are mandatory in all cases when members are providing valuation advice in a written form. However, there are some types of valuation activity where the mandatory application of VPSs 1-6 may be unsuitable or inappropriate. The circumstances where VPSs 1-6 are not of mandatory application are:
Providing an agency or brokerage service in respect of the acquisition or disposal of one or more assets
Providing valuation advice expressly in preparation for, or during, negotiations or impending litigation, including where the valuer is acting on the behalf of others, representing their interests or needs
Acting or preparing to act as an expert witness
Performing statutory functions (e.g. right to buy valuations)
Providing valuations to a client purely for internal purposes, on express contractual terms that exclude the valuer’s liability, and without communication to a third party.
In such cases, members may advise that a valuation was performed in accordance with Red Book Global Standards on an excepted basis.
Even though the content of VPS 1 (which sets out the matters to be addressed in terms of engagement – scope of work) may not be mandatory in ‘exception’ cases, terms of engagement are still required and they must be clear, unambiguous and appropriately documented.
In practical terms for internal valuers, it is recommended that where providing reports to decision makers, that members make the following clear:
The purpose and use of the advice
That the advice is for the authority’s internal purposes only and that no third party may rely on the advice
Clear exclusion of valuer’s liability.
Essentially, ‘the client’ (the local authority decision makers), need to fully understand the nature, limitations and extent of the advice they receive.
Whenever valuation advice is given, the principles set out in the Red Book should be observed to the fullest extent possible.
Am I correct that rotation of valuers in local authorities is different from that of rotation in the private sector?
Yes you are correct. The requirements in respect of regulatory valuations, as set out in the UK supplement, do not apply to in-house local authority valuers. Following work recently undertaken by the ‘public sector valuation rotation working group’, the recommendation arising from their report was that this remains the case. Specifically, the recommendation was:
“Public sector investment property valuations for financial reporting should not be considered as regulated purpose valuations under the RPV definition of RICS Valuation – Global Standards: UK national supplement 2023.”
This recommendation has been approved by the Standards and Regulation Board, the Valuation Assurance Committee and the Knowledge and Practice Committee. For further information, please visit Public Sector Valuations.
The relevant requirements for all valuers, including those working within a local authority, are as set out in PS 2, 5.4 Rotation policy and 5.5 Time as signatory.
Where the valuation is of an asset(s) previously valued by the member or the RICS-regulated firm for any purpose, there are also specific disclosures that must be made in the terms of engagement, the report and any published reference to the valuation as set out under PS 2 5 Disclosures where the public has an interest or upon which third parties may rely (page 29).
Presumably an in-house valuer doesn’t need to undertake a conflict of interest check?
No this presumption is incorrect as all members must follow the current edition of RICS’ Conflicts of interest. This involves the identification of any previous involvement and any related management of conflicts of interest (See PS 2 3). This links to requirements around independence and objectivity.
There are also specific requirements set out under PS 2 5.6 in relation to previous involvement (page 33).
Just to clarify - this means the report must make clear any involvement of previous valuations for LA assets?
Yes – where the valuation of an asset has previously been valued by the member (or the member’s firm), for the same purpose. This must be stated in the terms of engagement and the report, along with the policy on rotation.
When signing off reports prepared by other valuers in my team, what evidence do I need to demonstrate adequate supervision?
Where signing reports prepared by other individuals and are therefore the ‘responsible valuer’, you are accepting responsibility not only for the opinion of value, but compliance with RICS professional standards. You must therefore be able to demonstrate adequate supervision of the valuation and answer any questions that may arise.
There are no mandatory requirements dictating what adequate supervision might look like, but essentially, the responsible valuer’s ‘fingerprints’ (and in essence the full audit trail) need to be all over the file. Examples might include:
A site inspection note record that the valuer was in attendance, or details of when the valuer last inspected the property
A copy of tracked changes to a reviewed initial report draft
Email correspondence requesting amendments or further information
Minutes of a meeting between the valuer and the person being supervised.
Where can I find assistance to meet RICS standards?
There are a number of framework documents available on the RICS Best Practice for Registered Valuers webpage. These framework documents include terms of engagement, report, conflict of interest and previous involvement recording and, site notes and valuation reasoning. These are provided to assist members with Red Book compliance and best practice.
Where can I get further information about the RICS Red Book compliance workshop?
Please visit RICS Red Book Compliance Workshop to book onto the free online webinar.
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